Affordable Housing: Making sure people and places do better

February 7, 2013

For the third in our series about how working groups are using research to inform their activities in the Central Corridor, we spoke with Gretchen Nicholls, Program Officer/Corridor Development Initiative for Twin Cities Local Initiatives Support Corporation (LISC). LISC worked with the cities of Saint Paul and Minneapolis to support the Big Picture Project that produced a coordinated affordable housing plan for the Central Corridor.
Let’s start with why it was necessary to develop a coordinated plan for affordable housing.
The reason for creating a coordinated plan for affordable housing for the full stretch of the Central Corridor was to build on the regional nature of the transit investment. By providing a range of housing options throughout the corridor, we are creating communities of choice and opportunity for those most in need.  
If people do better but places don’t, people leave. If places do better but people don’t, people get pushed out. We are working to do both simultaneously.
Strategic investment in affordable housing isn’t just about putting up buildings. It must integrate anti-displacement and foreclosure prevention, market rate housing, small business opportunities and jobs, schools, green space, good design principles, and positive placemaking. 
To realize the full potential of these transit investments, greater strategic alignment is needed among federal, state, regional, and local priorities, and between public and private partners.
Regional systems rely on local placemaking and local efficiency. That means promoting efficient, compact neighborhoods with an interconnected street network, access to transit, mixed land uses, and concentration of retail and services.
We also need a new and more comprehensive way of thinking about the cost of housing and true affordability, one that considers the impact that transportation costs associated with housing location have on a household’s economic bottom line (housing + transportation = affordability).
The Central Corridor Tracker measures affordability according to that definition.  What other factors do housing advocates need to follow to make sure the Corridor will have the desired supply of affordable housing?
We needed to drill more deeply into the rental housing supply in the Corridor because the market is dynamic and the arrival of the LRT line has the potential to escalate rents as well as to bring greater transit access and job opportunities to the area.  
For example, we looked at affordability in terms of the households already living along the Corridor, not just as defined by the Metro-wide average income. We considered building types and we analyzed the availability of the housing mix within sub-markets. We also asked landlords whether the LRT was likely to affect rents and whether they accepted Section 8 vouchers.  
Tracking these market factors is important, because an “improving” rental market can negatively affect the supply of housing for low-income residents by escalating rents. 
The Before the Train report from the Housing Preservation Project and HousingLink captures this snapshot of the rental housing inventory and provides a basis for developing strategies to minimize potential displacement.
That report segments the housing market into six sub-areas, and the Tracker will adopt this framework for its data going forward. What’s different about this market approach?
Building on the Central Corridor Investment Framework we were able to assess the corridor through the lens of sub-market areas, reflecting the strength of an area to attract private investment. The plan builds on the strength of community planning along the full stretch of the corridor, which includes: Downtown Minneapolis, University and Environs, Midway West, Midway, Midway East, and Downtown Saint Paul. 
These market areas have unique strengths and identities that influence the types of housing needed and the strategic investment focus. The majority of affordable housing strategies in strong markets are regulatory and policy-oriented (inclusionary zoning, density bonuses, etc.) that are meant to leverage the private market to pay for affordable housing, while weaker markets rely more heavily on public investment to stimulate private investments.
Of note is how we define affordable housing.  Using the federal definition of affordable housing—60% of the Twin Cities Area Median Income (AMI), or $82,700 for a family of four— 76% of the units in the Central Corridor are affordable housing. However, this definition tends to overstate the level of affordability in low income areas. Through the lens of local incomes in the Corridor itself, under 10% are affordable. This is a function of how much lower Central Corridor incomes are compared to region-wide incomes.
(From Before the Train report, Housing Preservation Project, Sept 2012)
What are the challenges of anticipating, tracking and influencing a continuing supply of affordable housing?
An optimal mix of housing options along the Central Corridor will require a range of strategies and policies. The Central Corridor station area plans project 17,000 new housing units over the next 30 years, predominately fueled by private investment and market rate development. The private markets are critically important, as they will provide over 90% of the investment, while the limited public sector resources will help to leverage that investment to achieve public purposes and healthy communities. Affordable housing is a key component of healthy communities.  
A unified housing strategy for the whole corridor can not only attract millions of investment dollars to this stretch of the Twin Cities, it can stabilize existing housing stock, preserve long-term affordability, and make sure new development projects improve the quality of life for residents in the surrounding neighborhoods. We need a range of preservation strategies, from small or moderate improvements to transformative redevelopment.
Last year, the Tracker incorporated a new indicator related to changes in businesses at street level along the LRT line. Are there more current and dynamic measures you’ll be using to track what’s happening in the housing sector?
The Big Picture Project will be tracking three key indicators of change as they relate to housing:
1. The numeric goals identified for new construction and preservation of long-term affordable housing and for loans and assistance to help low- and moderate income families stay in their homes.
2. Value fluctuation of owner-occupied housing (e.g. value, tax rates, price of a new home, assessed value of existing housing, average sales price, etc.), and rental rates of privately owned rental housing
3. Demographic change in income and racial composition within subareas (the goal is to provide for mixed income communities and to maintain communities of color).